What Does Month to Date (MTD) Mean in Finance?

Month to Date Meaning

Month to Date, often abbreviated to MTD, is a metric that measures the financial performance within the current month, up to the present date.

 

It provides an ongoing snapshot of a business’s finances during the month, which can make it a useful measurement of the financial progress within that month.

What Does Month to Date (MTD) Mean in Finance?

Month to Date Example

The month to date calculation is very straightforward.

 

It simply involves summing the relevant values from the beginning of the month up to the current date.

 

For example, if a business wanted to calculate the month to date sales total for revenue on the 10th of the month, they would simply add up all of the revenue from the 1st to the 10th of the month:

Date of Month

Revenue

1st

£150

2nd

£200

3rd

£100

4th

£50

5th

£100

6th

£300

7th

£400

8th

£350

9th

£200

10th

£250

MTD Total

£2,100

Importance of Using Month to Date in Finance

So, what does month to date mean to a business, and why would they use it?

Performance Monitoring

Measuring the month to date totals are often used to monitor the performance of various financial indicators such as revenue and expenses within a given month.

 

For instance, businesses can compare the current month to date total with the previous month to date total to gain insights into performance.

 

For example, comparing the first 10 days of the current month with the first 10 days of the previous month.

 

This comparative analysis can reveal trends and patterns and help management to act if necessary.

Budgetary Control

Businesses often use month to date figures to compare actual financial performance against their budget for the month.

 

This helps in identifying areas where expectations are falling short the business can take action to bring performance back on track.

 

For example, a business budgets that revenue for the full month should be £100,000.

 

However, the month to date total after the first two weeks is only £20,000, so it looks likely they might not be on course to hit their target.

 

As the month to date total has highlighted this issue, management can push the sales team harder to try and bridge the gap between actuals and expectations.